Directors in 30% of insolvency cases suspected of misconduct

A report has revealed that directors in 30% of insolvency cases are referred to the Insolvency Service’s disqualification unit for misconduct and face being disqualified for up to 15 years.

According to the latest research by Accountancy Firm Moore Stephens, insolvency practitioners examining 15,412 business cases over a one-year period reported a total of 4,671 directors for potential misconduct.

Of the 4,671 cases reported 1,273 of them underwent further investigation, a total of 27%. This figure is up from the 2011 figure of 21% when out of 5,401 initial reports of wrongdoing, disqualification proceedings began against 1,031 businesses.

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Mike Finch, partner at Moore Stephens, said: "These are cases where there is strong evidence that a company director has broken the rules to the detriment of creditors like lenders, suppliers and HMRC.

“It is important that the funding is there to all the Insolvency Service to pursue these cases, as disqualifying rogue directors acts as a crucial deterrent and is vital to ensuring a fair deal for creditors in an insolvency.”